Encourage Chinese investment in Ethiopia’s industrialization

Ethiopia’s industrialization strategy is aimed at attracting foreign direct investment. A push in recent years to attract investment has seen the landlocked country become one of the largest recipients of foreign direct investment on the continent. Chinese investments in the country, which tripled in 2021 compared to the previous year, played a major role.

But the approach has been beset by problems in recent years, from the COVID-19 pandemic to the two-year war in the northern Tigray region that ended in 2022. The US – a major export destination for textiles and clothing – ended Ethiopia’s participation in the AGOA Trade Preference Program in 2022 due to sanctions imposed after the Tigray war.

Investors also believe this is a major pain point for them, according to Hibret Lemma, CEO of the Investor’s Association at Hawassa Industrial Park, the largest government-owned park.

“There is a tendency to divert attention to other sectors because our sectors require a lot of maintenance,” he told Semafor Africa. “The government should focus on retaining the investors it has, rather than trying to attract new ones in a difficult environment.”

Other obstacles to the success of the country’s strategy are labor wages. The government’s attempt to attract textile and clothing manufacturers has ended in failure as wage problems have remained a source of high turnover. Ethiopia remains one of three countries without a fixed minimum wage on the continent.